In recent years, a growing number of Bangladeshi businesses have been relocating operations to India, sparking discussions about economic shifts in South Asia. This trend is driven by India’s larger consumer market, better infrastructure, and favorable policies, while Bangladesh faces challenges like rising costs, political instability, and energy shortages.
This article explores the key reasons behind this business migration, its economic impact, and what it means for both countries.
Top Reasons Bangladeshi Businesses Are Moving to India
1. Larger Market Access & Consumer Base
- India’s 1.4 billion population offers a vast consumer market compared to Bangladesh’s 170 million.
- Easier regional trade under SAFTA (South Asian Free Trade Area) and BBIN (Bangladesh-Bhutan-India-Nepal) initiatives.
- Growing Indian middle class increases demand for products traditionally supplied by Bangladeshi firms (e.g., textiles, pharmaceuticals).
2. Better Infrastructure & Logistics
- India’s ports, highways, and railways are more developed, reducing supply chain delays.
- Dedicated industrial corridors (e.g., Delhi-Mumbai Industrial Corridor) offer plug-and-play manufacturing hubs.
- Reliable electricity supply (unlike Bangladesh’s frequent power cuts).
3. Lower Production Costs & Tax Incentives
- Cheaper labor in some Indian states (e.g., Bihar, Uttar Pradesh) compared to rising wages in Bangladesh.
- Tax breaks for foreign investors (e.g., Gujarat’s incentives for textile parks).
- Reduced import duties on raw materials when manufacturing in India.
4. Political Stability & Ease of Doing Business
- Bangladesh’s political tensions (e.g., election-related unrest) create uncertainty.
- India’s improving “Ease of Doing Business” rank (#63 in 2025 vs. Bangladesh at #129).
- Fewer sudden policy changes (Bangladesh has faced abrupt export-import rule shifts).
5. Energy Crisis in Bangladesh
- Frequent gas and electricity shortages disrupt production.
- High fuel import dependency makes energy costs volatile.
- India’s more stable energy supply attracts energy-intensive industries (e.g., ceramics, steel).
6. Access to Global Supply Chains
- India’s free trade agreements (FTAs) with UAE, Australia, and Europe help exporters bypass tariffs.
- Bangladesh’s LDC graduation in 2026 means losing duty-free EU market access, pushing firms to relocate.
7. Banking & Financial Advantages
- Easier access to loans & credit in India’s more developed banking sector.
- Stronger Indian rupee reduces forex risks compared to Bangladesh’s taka depreciation.
Key Industries Moving from Bangladesh to India
| Industry | Why They’re Moving | Popular Indian Destinations |
|---|---|---|
| Textiles & Garments | Lower labor costs, better infrastructure | Gujarat, Tamil Nadu |
| Pharmaceuticals | Faster regulatory approvals, bigger market | Hyderabad, Bengaluru |
| Leather Goods | Avoid EU anti-dumping duties on Bangladesh | Kanpur, Agra |
| Ceramics & Tableware | Reliable gas supply for kilns | Morbi (Gujarat) |
| Electronics Assembly | Proximity to Indian component suppliers | Noida, Hyderabad |
Impact on Bangladesh’s Economy
Negative Effects
❌ Job losses in key export sectors (RMG employs 4 million+).
❌ Reduced FDI as investors follow businesses to India.
❌ Trade deficit growth if exports decline.
Positive Effects (for Some Firms)
✅ Companies keeping HQs in Bangladesh but expanding to India gain market share.
✅ Pressure on Dhaka to reform business policies.
Will This Trend Continue? Future Outlook
- If Bangladesh improves power supply and reduces red tape, some businesses may stay.
- India’s Production-Linked Incentive (PLI) scheme will keep attracting manufacturers.
- China+1 strategy benefits both India and Bangladesh, but India currently has an edge.
Conclusion
Bangladeshi businesses are moving to India primarily for market access, lower costs, and stability. While this benefits India’s economy, Bangladesh must address energy shortages, political risks, and policy uncertainty to retain firms.